Observer States

Revised specific terms of reference of theSelect Committee of Experts on the Evaluation of Anti-Money Laundering Measures (MONEYVAL)

1. Name of Committee:

Select Committee of Experts on the Evaluation of Anti-money Laundering Measures (MONEYVAL)

2. Type of Committee:

Select Committee

3. Source of terms of reference:

European Committee of Crime Problems (CDPC)

4. Terms of reference:

a. Money laundering, i.e. the process through which criminals give an apparently legitimate origin to proceeds of crime, is an expanding and increasingly international phenomenon. It may particularly affect economies which are undergoing transformation and which offer significant opportunities for foreign investment. The financial regulatory framework, both in banking and non-banking sectors, is often less stringent in these countries than in others, which make them vulnerable to money laundering operations. Given the diverse illegal activities, including money laundering, of organised crime groups in some of these countries and, in exceptional cases, their alleged infiltration into entire national economies, it seems that it is in their vital interest to create and maintain a credible financial system capable of detecting, preventing and controlling money laundering.

In addition, recent experience has shown that organised terrorist groups also misuse the world's financial system to fund their illegal operations, thus posing a serious risk to financial institutions of being used for hiding terrorist money. Measures aiming at the prevention and deterrence of money laundering therefore need to be extended to terrorist financing.

b. The establishment of an efficient anti-money laundering system is due in many countries to the enforcement of national and international anti-money laundering measures and their regular monitoring through international bodies, such as the Financial Action Task Force on Money Laundering (FATF).1 The monitoring, which implies evaluating each other's performance in so-called “peer groups”, greatly enhances the compatibility of national norms with international standards in the financial, law enforcement and judicial sectors.

c. Taking into account the procedures and practices used by the FATF, the IMF and the World Bank, the Committee shall:

- evaluate, by means of self- and/or mutual evaluation questionnaires (and/or other documentation agreed between MONEYVAL and the IMF/World Bank representing a common AML/CFT methodology) and periodic on-site visits, the performance of those member states of the Council of Europe which are not members of the FATF (subject to paragraph 5(a)ii below)2 in complying with the relevant international anti-money laundering and countering terrorist financing standards, as contained e.g. in the recommendations of the FATF, including the Special Recommendations on Financing of Terrorism and Terrorist Acts and related Money Laundering, the 1998 United Nations Convention on illicit traffic in narcotic drugs and psychotropic substances, the United Nations Convention against Transnational Organised Crime, the relevant European Union Directives on the prevention of the use of the financial system for money laundering and the 1990 Convention on laundering, search, seizure and confiscation of the proceeds from crime, concluded within the Council of Europe, and, where necessary, provide assistance, upon request, to enable them to comply with the recommendations;

- evaluate, by means of questionnaires (and/or other documentation agreed between MONEYVAL and the IMF/World Bank representing a common AML/CFT Methodology) and periodic on-site visits, the performance of those applicant states for membership of the Council of Europe which are not members of the FATF in complying with the international anti-money laundering and countering terrorist financing standards enumerated in the paragraph above, provided the following requirements are met: the applicant state must make the request in writing; the request must be accepted by the Committee of Ministers; the applicant state must undertake in its request to participate fully in the evaluation procedure and comply with the results and recommendations formulated by the MONEYVAL; and the applicant state must contribute to the cost of the evaluation procedure;

- adopt reports on each evaluated country's situation as to:

i. the features and magnitude of money laundering, including typologies;ii. the efficiency of measures taken to combat money laundering and terrorist financing in thelegislative, financial regulatory, law enforcement and judicial sectors;

- where appropriate, make recommendations to the evaluated countries, with a view to improving the efficiency of their anti-money laundering and countering terrorist financing measures and to furthering international cooperation;

- submit to the CDPC an annual summary of its activities and any recommendations it deems appropriate with a view to furthering the adoption or implementation of anti-money laundering measures.

5. Membership of the Committee:

a. i. (Council of Europe member states not members of the FATF, subject to paragraph 5(a)ii below): three experts appointed by the governments of each of the following member states: Albania, Andorra, Armenia, Azerbaijan, Bosnia and Herzegovina, Bulgaria, Croatia, Cyprus, Czech Republic, Estonia, Georgia, Hungary, Latvia, Liechtenstein, Lithuania, Moldova, Malta, Poland, Romania, Russian Federation, San Marino, Serbia and Montenegro, Slovak Republic, Slovenia, “the former Yugoslav Republic of Macedonia”, Ukraine;

ii. three experts appointed by the Government of any Council of Europe member state referred to under (a)i above which has become a member of the FATF and thus would, save for this paragraph, cease to be a member of MONEYVAL, but decides to remain a member of the latter as well. Such a state may also agree to submit to the evaluation process of MONEYVAL;

iii. (FATF): two experts appointed by the Presidency of the FATF from FATF countries for two-year periods;

iv. three scientific experts appointed by the Secretariat.

b. The Council of Europe's budget3 bears the travel and subsistence expenses of three experts from each of the member states mentioned under a.i. and a.ii, as well as those of the three scientific experts. These member states may send additional experts at their own expense.

c. Members' desirable qualifications: senior officials and experts with responsibility for supervision of financial institutions, senior members of law enforcement or judicial bodies, with particular knowledge of questions related to money laundering, including national and international anti-money laundering instruments, (e.g. FATF recommendations).

d. The European Commission and the Secretariat General of the Council of the European Union may send a representative to meetings of the Committee, without the right to vote or defrayal of expenses.

e. The following observers with the Council of Europe may send a representative, without the right to vote or defrayal of expenses to meetings of the Committee:

- Canada;- Holy See;- Japan;- Mexico;- United States of America.

f. The following observers with the Committee may send representatives, without the right to vote or defrayal of expenses:

- Members of the FATF other than those referred to in 5.a.ii;- Secretariat of the Financial Action Task Force on Money Laundering (FATF);- ICPO-Interpol;- Commonwealth Secretariat;- International Monetary Fund (IMF);- United Nations Drug Control Programme (UNDCP);- United Nations Counter-Terrorism Committee (CTC);- United Nations Crime Prevention and Criminal Justice Division;- World Bank;- European Bank of Reconstruction and Development (EBRD);- Offshore Group of Banking Supervisors (OGBS);- Egmont Group.

g. The Bureau of the CDPC may authorise the admission of other observers to the Committee.

6. Working structures and methods:

The term of office of the Chairman and Vice-Chairman shall be two years. It may be renewed once.4The Committee may elect a Bureau to facilitate its discussions and adopt internal rules of procedure.

Note 4 As decided by the Committee of Ministers at their 924th meeting on 20 April 2005, in conformity with Article 21 of Appendix II toResolution (76) 3 on committee structures, terms of reference and working methods and in derogation of Article 17 of this Appendix.